City of Tacoma v. Tacoma Light & Water Co.

• Decision Date: 05 January 1897
• Citation: City of Tacoma v. Tacoma Light & Water Co., 16 Wash. 288, 47 P. 738 (Wash. 1897)
• Court: Washington Supreme Court
• Parties: CITY OF TACOMA v. TACOMA LIGHT & WATER CO.

47 P. 738

16 Wash. 288

CITY OF TACOMA v. TACOMA LIGHT & WATER CO.

Supreme Court of Washington

January 5, 1897

Appeal from superior court, Pierce county; W. H. Pritchard, Judge.

Action by the city of Tacoma against the Tacoma Light & Water Company. Judgment for plaintiff. Defendant appeals. Reversed.

Dunbar J., dissenting, on the sufficiency of evidence.

Parsons, Corell & Parsons, Crowley, Sullivan &amp Grosscup, and John H. Mitchell, for appellant.

James Wickersham, for respondent.

GORDON, J.

This action was brought by the respondent city to recover damages for deceit and misrepresentation of the appellant in the sale of a water and light plant, the purchase price of which was $1,750,000. The jury found for the respondent in the sum of $787,500, and from the judgment entered upon this verdict and the order of the superior court denying a motion for a new trial, an appeal has been taken. Fraud is relied upon as the basis of plaintiff's cause of action. It is not based upon anything contained in the contract,-upon any covenant or warranty therein contained,-but it goes beyond the contract and sets up false representations in regard to the character extent, and value of the property sold, and further alleges that the appellant fraudulently and corruptly induced and employed the officers of the city and the president of the city council to forego any investigation or examination of the character, condition, and value of the property purchased; that, by reason of such corrupt inducement and employment, the respondent was prevented from "making any investigation and examination of the sources of water supply, of the value, character, and extent of the said property so purchased from defendant." Damages were laid in the complaint at $1,000,000. The answer was a general denial of the allegations of misrepresentation and fraud, and alleged that the city, by its proper officers and agents, made a full examination of the property embraced within the purchase, and, for the purpose of fully ascertaining the character, condition, and value thereof, employed one Rudolph Hering, a competent and experienced civil and hydraulic engineer, and that said Hering made a full report thereon to the city council, and that the members of the council had full opportunity at all times to make such examination and inspection of the property, and everything connected with it, as fully as they or any one of them might desire; alleges that the city purchased the property sold to it by appellant, relying upon the knowledge of its officers, agents, and engineers employed by it to make an examination thereof, and not in reliance upon any statement or representation of any kind made by the appellant to respondent. In its reply, the city admits that it employed the said Hering, and that he made some examination of the property, and "that he made a report thereof to the city council,-and alleges that he relied entirely upon the representations concerning all matters in the said report, made to him by the defendant, its agents, servants, and employés, and that he made no other examination, but denies that the report contained full information of the kind, character, and situation of the property, including the sources of water supply, *** and denies that plaintiff purchased the property relying upon the knowledge of its officers, agents, employés, and engineers employed by it to make an examination thereof."

A preliminary question is presented by the motion of respondent's counsel to strike a so-called "Abstract of Evidence," Exhibits, etc., being a printed book containing something over 500 pages, which the appellant has filed in this court. The so-called "Abstract" was prepared for the purpose of facilitating the labors of the court, and with a view to condensing the record; but the motion must prevail for the reason that it is no part of the record, and has no place in the proceedings under the statute and rules of this court.

The lower court, in submitting the case to the jury, restricted their consideration of it, in so far as misrepresentation is charged, to four specific questions of fact, and withdrew all others from their consideration. Those submitted were: "(1) Whether, before the sale, defendant made any representations to plaintiff relative to the quantity of water actually flowing from Thomas and Patterson Springs; (2) as to the quantity of iron pipe then laid; (3) as to the quantity of land at Station A; (4) as to the value of the property sold." The court also submitted the question of whether "the defendant and the president of the city council of the city of Tacoma entered into collusion for the purpose of defrauding the city, and whether the defendant procured the said president of the council to act for and on its behalf, instead of on behalf of the city, as his official duty required." The court further charged: "I instruct you that all other alleged misrepresentations charged in the complaint are withdrawn from your consideration, and that, if the plaintiff recover at all, it must be on the ground of misrepresentations in these, or in some one of these, respects." Counsel for the city, in his elaborate and exhaustive brief, has presented the case in all respects as if the consideration of the jury had not been so restricted, and he has also treated certain offers of evidence made and rejected upon the trial as if the proof had actually been made and received. We have frequently held that, upon appeal from a judgment in a particular case, this court can only consider errors complained of by the appellant, and, in the absence of a cross appeal, cannot examine the record for the purpose of determining alleged errors or rulings of which the respondent complains. Glenn v. Hill, 11 Wash. 542, 40 P. 141; Langert v. David, 14 Wash. 389, 44 P. 875; Pepperall v. Transit Co. (Wash.) 45 P. 743.

A great many errors have been assigned in the brief of counsel for the appellant, but the conclusion which we have reached regarding two of them renders it unimportant that the others complained of should be considered.

At the conclusion of the evidence on the trial below, the appellant moved for a nonsuit, upon the ground that the plaintiff had failed to prove a sufficient cause for the jury. It also moved for a new trial, which motion was based upon various grounds, and, among others, "insufficiency of the evidence to justify the verdict." The ruling of the lower court denying the motion for nonsuit, and the subsequent overruling of the motion for a new trial, present a single question. Before proceeding to a discussion of the evidence, we may here observe that a municipal corporation has a right to rely on the good faith and loyalty of its officers; that such officers owe to their municipalities the utmost degree of good faith; and that it is their duty at all times to use their best judgment in protecting the interests of the municipalities whose officers they are, and a person dealing with such officers is conclusively presumed to know the extent of the power and authority which the law has conferred upon the officer with whom he deals, and is also presumed to know that the law exacts and requires of such officer the utmost good faith and loyalty to such municipality. But, subject to the limitation above noticed the rule applicable to the contracts of municipal corporations is, we think, the same as that applicable to the contracts of individuals; in other words, where the contract entered into is within the scope and extent of the power and authority conferred by law on the officer, and no question of power or authority is involved, the rule applicable to that contract is the rule that is common to all contracts; and, in an action by a municipal corporation founded upon fraud, there can be no recovery unless the evidence to substantiate the fraud charged is under the general rules of law as to the sufficiency of evidence sufficient to support a verdict. The rule is thus stated in Argenti v. City of San Francisco, 16 Cal. 256: "Contracts of corporations, whether public or private, stand on the same footing with the contracts of natural persons, and depend on the same circumstances for their validity and effect." And in Baird v. Mayor, etc., 96 N.Y. 593, it is said: "No different rule prevails in respect to the contracts of corporations than that applicable to the contracts of private individuals, and we must determine the rights involved in this action by the light of the same principles which experience has shown to be salutary in other cases." The cases of People v. Fields, 58 N.Y. 491, and Hume v. U. S., 132 U.S. 406, 10 S.Ct. 134, cited and most strongly relied upon by respondent's counsel, are not in conflict with the rule above stated. In the first of these cases the act of the comptroller of the city of New York which was pleaded as a payment, etc., was held by the court to be an act beyond the power of that officer. The court say: "The payment was made and received without any lawful power in the comptroller to make it. The defendant is chargeable with knowledge of this. It was a payment by an agent, who had no authority as such to make it." In Hume v. U.S., supra, the court was dealing with a contract which it decided that "no man in his senses, not under delusion, would make, on the one hand, and which no fair and honest man would accept on the other"; and the principles governing that case, and those involved in the case at bar, are not analogous. Nor was there anything decided in Tacoma Light & Water Co. v. City of Tacoma, 13 Wash. 115, 42 P. 533, which militates against the view herein expressed. The language made use of in that case, and which is cited by counsel, viz.: "The appellant knew that it was dealing with a municipal...